SOPR

Tech spec

Brief Description: Spent Output Profit Ratio is the profit or loss of transactions among investors.

This indicator compares the price at which coins investors were sold to their original purchase cost, providing insight into whether these holders, on average, are spending their coins at a profit or a loss.

Metric variants

• _lth: SOPR restricted to Long-Term Holders (age ≥ 155 days).
• _sth: SOPR restricted to Short-Term Holders (age < 155 days).

Interpretation SOPR serves as an indicator of market sentiment and the trading behavior of Short-Term Holders.

• Ratio Above 1: A consistent ratio above 1 suggests a bullish sentiment, where investors are realizing profits when they spend coins.
• Ratio Below 1: A ratio below 1 reflects a bearish sentiment, indicating that investors are realizing losses on their spent coins.

Retests of the 1 level in SOPR can also provide signals about market dynamics. During an uptrend, a retest of 1 often acts as support. In a downtrend, a retest of 1 may act as resistance, signaling that traders expect only a brief recovery, often referred to as a "dead cat bounce."

Advanced Explanation SOPR calculates the ratio of the sale price to the original purchase price (cost basis) of each UTXO (Unspent Transaction Output). When the ratio is above 1, it indicates that, on average, coins were sold for a profit. Conversely, a ratio below 1 implies that coins were sold at a loss.

The formula for SOPR is:

SOPR = Sum(Selling Price of Spent Coins) / Sum(Original Purchase Price of Spent Coins)